Nifty ends Tuesday’s session with huge losses

Breaching a crucial psychological level of 11,300, the local equity benchmark Nifty ended Tuesday’s session with huge losses of around 100 points. The index opened on sluggish note and traded in red terrain for most part of the day, impacted by credit rating agency, India Ratings and Research’s latest report that banks' credit costs are likely to remain elevated at 2%-3% during FY19-FY20, on the back of ageing of non-performing assets (NPAs), accelerated provisioning and slippages especially from non-corporate accounts. Domestic sentiments remained negative with Finance Minister Arun Jaitley blaming the depreciation of rupee to a combination of global factors, including trade war and internal policy decisions of the United States. Some concerns also came with another report that the indebtedness of Indian households nearly doubled in the year to March 2018, with their financial liabilities rising 80% to Rs 6.74 lakh crore.

Furthermore, Nifty extended losses in the last hour of trade, amid a report stating that with interest rates cycle reversing, cost of borrowing for housing finance companies (HFCs) and microfinance institutions (MFIs) is likely to increase by over 30 basis points in the current fiscal year, and by another 40-50 basis in FY20.  Anxiety spread among the traders also with International Monetary Fund’s (IMF) estimates that the real effective depreciation of Indian rupees is between 6-7% compared to December 2017. It said broadly since the beginning of the year, Indian rupee has lost about 11% of its value in nominal terms vis-a-vis the US dollar. Market participants failed to take any sense of relief with CBDT Chairman Sushil Chandra expressing confidence in exceeding Rs 11.5 lakh crore direct tax collection target in current fiscal. In 2018-19 budget, the government had projected a 14.3 per cent rise in direct tax collections to Rs 11.5 lakh crore.

All the sectoral indices ended in red on the NSE except FMCG. The top gainers from the F&O segment were Hindustan Unilever, Biocon and Dabur. On the other hand, the top losers were Bank of Baroda, Balrampur Chini Mills and Union Bank. In the index option segment, maximum OI continues to be seen in the 11,300-11,800 calls and 11,000 -11,400 puts indicating this is the trading range expectation.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 0.55% and reached 14.41. The 50-share Nifty was down by 98.85 points or 0.87% to settle at 11,278.90.

Nifty September 2018 futures closed at 11310.20 on Tuesday, at a premium of 31.30 points over spot closing of 11278.90, while Nifty October 2018 futures ended at 11353.45, at a premium of 74.55 points over spot closing. Nifty September futures saw a contraction of 0.14 million (mn) units, taking the total outstanding open interest (OI) to 26.29 mn units. The near month derivatives contract will expire on September 27, 2018.

From the most active contracts, Bank of Baroda September 2018 futures traded at a premium of 1.35 points at 113.55 compared with spot closing of 112.20. The numbers of contracts traded were 50,782.

Yes Bank September 2018 futures traded at a discount of 0.95 points at 323.65 compared with spot closing of 324.60. The numbers of contracts traded were 28,794.

State Bank of India September 2018 futures traded at a premium of 1.55 points at 275.15 compared with spot closing of 273.60. The numbers of contracts traded were 27,537.

Reliance Industries September 2018 futures traded at a premium of 6.35 points at 1221.75 compared with spot closing of 1215.40. The numbers of contracts traded were 22,519.

Tata Motors September 2018 futures traded at a premium of 0.40 points at 251.65 compared with spot closing of 251.25. The numbers of contracts traded were 18,980.

Among Nifty calls, 11500 SP from the September month expiry was the most active call with an addition of 0.33 million open interests. Among Nifty puts, 11300 SP from the September month expiry was the most active put with a contraction of 0.44 million open interests. The maximum OI outstanding for Calls was at 11,500 SP (4.29mn) and that for Puts was at 11,200 SP (3.72mn). The respective Support and Resistance levels of Nifty are: Resistance 11,370.58 ---- Pivot Point 11,319.77 --- Support --- 11,228.08.

The Nifty Put Call Ratio (PCR) finally stood at 0.94 for September month contract. The top five scrips with highest PCR on OI were Repco Home Finance (1.50), Shree Cement (1.00), Ramco Cements (0.83), Muthoot Finance (0.79) and Jet Airways (0.79).

Among most active underlying, Reliance Industries witnessed a contraction of 1.58 million units of Open Interest in the September month futures contract, followed by State Bank of India witnessing an addition of 5.24 million units of Open Interest in the September month contract, Bank of Baroda witnessed an addition of 8.79 million units of Open Interest in the September month contract, Yes Bank witnessed a contraction of 5.24 million units of Open Interest in the September month contract and Axis Bank witnessed a contraction of 1.11 million units of Open Interest in the September month future contract.